Microsoft, the world's largest software maker, has seen a wave of competitors from Web start-ups to Google offering word processing, presentation and spreadsheet software over the Internet for free with advertising or a monthly subscription.

LOS ANGELES
(Reuters) - The next upgrade of Office business software from Microsoft
Corp will include a version that edits word processing documents and
spreadsheets inside a Web browser, the software maker said on Tuesday.

The online version of Office, which includes the Word and Excel
programs, aims to prevent competitors such as Google Inc from pecking
away at Microsoft's dominance in software used by office workers, and
expand the market for one of its most profitable products.

Microsoft would not comment on when it plans to release the next
version of Office, dubbed "Office 14," but in the past it has shipped
an upgrade every two to three years. It introduced the current Office
suite of programs in January 2007.

The company said Office Web applications will offer lightweight,
online versions of Word, Excel, PowerPoint presentation software and
the OneNote collaboration program. Office files can be managed and
edited on a normal desktop computer, a Web browser or a mobile phone.

Microsoft, the world's largest software maker, has seen a wave of
competitors from Web start-ups to Google offering word processing,
presentation and spreadsheet software over the Internet for free with
advertising or a monthly subscription.

Google Docs offers spreadsheets, word processing, and presentation software over the Internet as a free service.

"Nobody, none of our competitors, will do as good of a job on the
phone, the browser or the PC," said Chris Capossela, a senior vice
president at Microsoft's Office business.

The company announced the news at the Professional Developer's
Conference, Microsoft's annual gathering of engineers to detail the
company's future plans.

Microsoft has mostly resisted the push to make its Office suite
available online, choosing to sell licenses to run the applications
locally on a single computer. It allows users to share files through
Office Live, which is free with advertising or available with more
functions for a monthly subscription.

In the September quarter, Microsoft's Office business division was
the biggest revenue and profit driver, outgaining even its
bread-and-butter Windows unit.

In the previous fiscal year, the Office unit generated $18.9 billion in revenue and $12.4 billion in profit.

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Microsoft said the new Office Web applications will be available for
consumers on Office Live, although it did not disclose whether it would
be paid for by advertising or subscriptions.

For large corporate customers, they can either pay for a license to
run those applications online using their own computer servers, or run
those programs in Microsoft's data centers for a monthly fee.

Microsoft said users will be able to view Word documents or Excel
spreadsheets in the same way regardless of whether they are using a Web
browser or on a standard desktop. The online Office version also has a
similar look and feel to the desktop applications, albeit with less
functions.

The new Office Web applications will work on Internet Explorer,
Mozilla's Firefox and Apple Inc's Safari browsers. They will be
available for a technical preview sometime this year, according to
Microsoft.

Capossela sees the applications expanding the base of Office users,
notably employees who don't work on a computer sitting on a desk --
nurses, truck drivers or factory workers -- but require some business
software accessible over the Web.

It also offers, Capossela notes, the opportunity to make money in
the form of advertising or subscriptions for a software product that is
heavily pirated.

"We have a huge number of users. Very few pay us. There is a huge
opportunity for us in this space because we can get revenue from people
we are not getting anything from," said Capossela, who did not
elaborate on the effect the new service would have on Office's profit
margins.